(BIVN) – The “first-ever coral reef insurance policy in the United States” was purchased in Hawaiʻi, covering the cost of restoring the reef in the event of a future damaging hurricane or tropical storm.
Excerpt from The Nature Conservancy press release issued on Monday:
Today, The Nature Conservancy (TNC) announces that it has purchased the first-ever coral reef insurance policy in the United States. The policy will provide funding for rapid repair and restoration of coral reefs in Hawai’i immediately after damage from a hurricane or tropical storm.
TNC and its partners developed the world’s first reef insurance policy specifically around hurricane damage, a major risk to coral reefs, in Quintana Roo, Mexico in 2019. Proceeds from this policy were used to repair the damage caused by Hurricane Delta. Since then, the Mesoamerican Reef (MAR) Fund, in conjunction with Willis Tower Watson’s (WTW) Climate and Resilience Hub, has implemented a parametric insurance program across the full extent of MAR, from southern Mexico to Belize, Guatemala and Honduras.
The Belize Reef Insurance Policy was actually recently triggered by Hurricane Lisa, resulting in reimbursement and prompt repairs to the beach and reef. TNC developed the Hawai’i Policy to pilot the concept after the state Senate passed a resolution in 2021 calling for a Reef Insurance Assessment, and following a feasibility study supported by the Bank of America in 2020 concluding that Hawaii’s coral reefs could be similarly insured against natural disasters.
In conjunction with WTW, TNC selected an insurance company from Munich Re to provide this parametric coverage. the global challenge of improving climate resilience. The Hawai’i policy adds tropical storms as a covered event, in addition to hurricanes covered in Quintana Roo and MAR Fund policies, because in Hawai’i tropical storms can cause significant damage without making landfall. The Hawai’i policy is triggered at wind speeds of 50 knots (57 mph) if close enough to reefs and can provide payouts up to a maximum of $2 million to enable rapid repair and restoration of reefs after storm damage. The policy will be in place throughout the 2023 hurricane season.
“The Nature Conservancy is thrilled to pilot the first coral reef insurance policy in the United States,” said Ulalia Woodside Lee, executive director of The Nature Conservancy, Hawai’i and Palmyra. “In Hawai’i, we are rooted in the environment; the health of our coasts and communities is directly linked to the health of the coral reefs surrounding our islands. By investing in nature, our insurance and financing partners demonstrate its value as an essential natural, cultural and economic resource.
“Helping to design the first pre-planned, trigger-based funding policy for coral reefs in the United States has been very rewarding,” said Simon Young, Senior Director, Climate and Resilience Hub, WTW. “As the scale and frequency of natural hazards related to climate change increase, this type of instrument can enable the rapid deployment of resources to help repair critical natural capital and restore valuable ecosystem services to the environment. following a triggering event.”
Coral reefs are a vital natural asset to the people, culture and economy of Hawai’i and are increasingly under threat due to climate change and other human impacts. Each year, the reefs provide coastal flood protection to people and property, more than $831 million worth of jobs, and more than $1.2 billion to the state’s economy through the reef tourism. Hawaii’s prized reef fisheries generate $13.4 million a year, $10 million of which provides food and income for local families. Yet local pressures, such as overfishing and land-based pollutants, have contributed to a 60% decline in living coral cover on some Hawaiian reefs over the past 40 years and declines of up to 90 % in some fisheries over the last century.
Tropical storms and hurricanes, which are increasing in intensity due to climate change, pose a major short-term threat to coral reefs. Research shows that severe hurricanes can result in a loss of 50% or more of live coral cover, and the loss of just one meter of reef height could result in the cost of damage doubling. Healthy, intact reefs can reduce wave energy by up to 97% and are an island’s first line of defense during storms; protecting them is vital. Reef insurance offers a concrete solution.
“Natural resource management is an expensive business and additional investment is always needed,” says Brian Nielson, administrator, Division of Aquatic Resources (DAR), State of Hawaii’s Division of Lands and Natural Resources. “TNC has been an excellent partner in restoring Hawaii’s reefs and fisheries, and we are grateful for their leadership in securing this assurance. This is a step forward in coral reef conservation and will provide a vital funding to repair reefs in times of dire need.
When a hurricane or tropical storm triggers a payout, TNC will activate an advisory committee in coordination with DAR and other local partners to guide the use and distribution of funds for reef repair and restoration. In early 2023, TNC, DAR and other partners will come together to develop a response plan to guide first responders and reef managers to deal quickly and effectively with storm impacts. The plan will reflect global restoration expertise and lessons learned from post-storm repair on the Mesoamerican Reef.
“Coral reefs are vital to our people, our culture, our way of life and our economy; reef insurance will help us take care of it,” says Ekolu Lindsey of Kīpuka Olowalu. “In Hawaiian culture, the coral polyp is the origin of all life. We have a kuleana (responsibility) to maintain the integrity and rejuvenation of our coral reef systems. We look forward to working with TNC and other partners to develop response plans for mālama (care of) our ko’a (corals) and to ensure reef insurance funds are applied fairly.
Next steps include co-developing a rapid response plan to repair and restore Hawaii’s coral reefs after storms and training reef responders to carry out the repair work.
The Nature Conservancy thanks the generous donors without whom this would not have been possible, including the Bank of America Charitable Foundation and the Howden Group Foundation, the charitable arm of the leading international insurance group, Howden Group Holdings.
Lee concluded, “We would like to thank the Howden Group Foundation and the Bank of America Charitable Foundation for their contributions to building resilience to climate change. They have made this work possible through multi-year grants to support the Coral Reef Insurance Policy.